Foreign Direct Investment and the Nigerian Financial Sector Growth
AbstractForeign Direct Investment (FDI) stimulates financial sector growth through the presence of foreign participation in investment in the nation. This paper explores the relationship between foreign direct investment and financial sector growth, providing empirical evidence from Nigeria. Annual time-series data were gathered on foreign direct investment, market capitalization, Gross Domestic Product, External Debt, Inflation rate, Exchange Rate and Degree of openness (ratio of imports and exports to gross domestic product) from 1981-2010. The empirical model was analyzed using the econometric techniques of ordinary least square method, unit root test, co-integration test, Error correction Mechanism, and Granger causality test. The findings suggest that the inflow of FDI has a positive impact on the Financial Sector in the short run but fail to translate to real long financial sector growth that could promote speedy economic growth due to the fact that the bulk of foreign direct investment has been channeled to other sectors of the economy namely the Oil and Gas Sector. The study recommends that government should encourage and formulate policies that will increase the volume and magnitude of Foreign Direct Investment into the Financial Sector as well as implement policies that attract foreign participation in domestic economy and create good and conducive investment climate that assures that foreign businesses thrive, among others.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Asian Economic and Social Society in its journal Asian Economic and Financial Review.
Volume (Year): 2 (2012)
Issue (Month): 2 (June)
Contact details of provider:
Postal: Sadeeq Block, Near Fawara Chowk, Abbasia Town, Rahim Yar Khan - 64200, Punjab, Pakistan
Web page: http://www.aessweb.com/
Foreign Direct Investment; Financial Sector Growth; Market Capitalization.;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Laura Alfaro & Sebnem Kalemli-Ozcan, 2004.
"Why doesn't capital flow from rich to poor countries? An empirical investigation,"
2004 Meeting Papers
53, Society for Economic Dynamics.
- Laura Alfaro & Sebnem Kalemli-Ozcan & Vadym Volosovych, 2008. "Why Doesn't Capital Flow from Rich to Poor Countries? An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 90(2), pages 347-368, May.
- Sebnem Kalemli-Ozcan & Laura Alfaro & Vadym Volosovych, 2003. "Why doesn’t Capital Flow from Rich to Poor Countries? An Empirical Investigation," Working Papers 2003-01, Department of Economics, University of Houston.
- Laura Alfaro & Sebnem Kalemli-Ozcan & Vadym Volosovych, 2005. "Why Doesn't Capital Flow from Rich to Poor Countries? An Empirical Investigation," NBER Working Papers 11901, National Bureau of Economic Research, Inc.
- James R. Markusen & Keith E. Maskus, 2001. "General-Equilibrium Approaches to the Multinational Firm: A Review of Theory and Evidence," NBER Working Papers 8334, National Bureau of Economic Research, Inc.
- Gunter Dufey & Ian H Giddy, 1981. "Innovation in the International Financial Markets," Journal of International Business Studies, Palgrave Macmillan, vol. 12(2), pages 33-51, June.
- Froot, Kenneth A & Stein, Jeremy C, 1991.
"Exchange Rates and Foreign Direct Investment: An Imperfect Capital Markets Approach,"
The Quarterly Journal of Economics,
MIT Press, vol. 106(4), pages 1191-217, November.
- Kenneth A. Froot & Jeremy C. Stein, 1992. "Exchange Rates and Foreign Direct Investment: An Imperfect Capital Markets Approach," NBER Working Papers 2914, National Bureau of Economic Research, Inc.
- Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
- Tschoegl, Adrian E, 1983. "Size, Growth, and Transnationality among the World's Largest Banks," The Journal of Business, University of Chicago Press, vol. 56(2), pages 187-201, April.
- Raza, Syed Ali & Jawaid, Syed Tehseen & Afshan, Sahar, 2013. "Is Stock Market Sensitive to Foreign Capital Inflows and Economic Growth? Evidence from Pakistan," MPRA Paper 48399, University Library of Munich, Germany.
- Malik, Saif Ullah, 2013. "Role of Foreign Private Investment and Remittance in Stock Market Development: Study of South Asia," MPRA Paper 54530, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qazi Muhammad Imran).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.